A federation is a type of sovereign state characterized by a union of partially self-governing states or regions united by a central (federal) government. In a federation, the self-governing status of the component states is typically constitutionally entrenched and may not be altered by a unilateral decision of the central government.
A confederation is an association of sovereign member states that, by treaty, have delegated certain of their competences (or powers) to common institutions, in order to coordinate their policies in a number of areas, without constituting a new state on top of the member states. Under international law a confederation respects the sovereignty of its members and its constituting treaty can only be changed by unanimous agreement.
By definition the difference between a confederation and a federation is that the many memberships of the member states in a confederation are voluntary, while the membership in a federation is not. A confederation is most likely to feature these differences over a federation:
(1) No real direct powers: many confederal decisions are externalised by member-state legislation.
(2) Decisions on day-to-day matters are not taken by simple majority but by special majorities or even by consensus or unanimity (veto for every member).
(3) Changes of the constitution, usually a treaty, require unanimity.
Reference: Federation, Confederation
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